Lawyer Resigns After Liu Asks Him to Suspend an Internal Fund-Raising Review

Updated, 9:25 p.m.|The former state attorney general hired last month by City Comptroller John C. Liu’s campaign to conduct an internal review of its fund-raising practices resigned on Thursday, a day after a federal inquiry focused on Mr. Liu led to criminal charges against one of his fund-raisers.

Mr. Liu, first on Monday through the campaign’s lawyer and then on Wednesday through the criminal defense lawyer he hired to represent him in the federal investigation, had requested that the former attorney general, Robert Abrams, suspend his inquiry, according to Mr. Abrams’s resignation letter. A copy of the letter, dated Thursday, was made available to The New York Times.

Mr. Liu’s criminal defense lawyer, Paul L. Shechtman, said on Wednesday night that he had cited the continuing federal investigation in asking that Mr. Abrams suspend his inquiry. Mr. Liu hired Mr. Abrams last month after an article in The Times found a range of problems in Mr. Liu’s fund-raising operation, including people who were listed as donors but said they had never given Mr. Liu any money.

Mr. Abrams seemed to suggest in his letter that he felt suspending his inquiry was premature, noting that he and his staff had “collegially communicated twice” in the past two weeks with the federal prosecutors overseeing the criminal inquiry and that the prosecutors had “not in any way discouraged the continuation of my review.”

Mr. Abrams added, however, that Mr. Liu’s requests that he suspend his inquiry “compromises my independence and my ability to do a thorough and effective job.”

Mr. Shechtman said on Thursday that parallel investigations served no one. “I am surprised that Mr. Abrams doesn’t appreciate that it’s in no one’s interest, including his own, to conduct two simultaneous investigations covering much the same ground,” he said. On Wednesday, Mr. Shechtman called it disorderly and too costly, but said before Mr. Abrams submitted his resignation that there was “a distinct possibility that when the federal investigation was over that the comptroller might ask him to recommence his investigation and tie up any loose ends.”

In his letter, however, Mr. Abrams did not refer to the possibility of continuing his inquiry, which he characterized as a “vigorous review” of the campaign’s fund-raising practices dating from December 2010.

He said that 30 people had already been interviewed — in Mandarin, Cantonese and English — “numerous” documents had been reviewed and the relevant law had been studied.

Mr. Shechtman’s phone call to Mr. Abrams came hours after the arrest of one of Mr. Liu’s fund-raisers, Xing Wu Pan, 46, who was charged with attempted mail fraud and conspiracy to commit wire fraud.

Mr. Liu has not been charged with a crime, and Mr. Shechtman said there was no suggestion that his client or anyone on his campaign staff had done anything wrong.

The complaint charging Mr. Pan detailed the work of an undercover F.B.I. agent who, a person with knowledge of the case said, had posed as an owner of several restaurants. The undercover agent sought Mr. Pan’s help in funneling $16,000 in illegal campaign donations to Mr. Liu’s campaign, the complaint said.

Mr. Pan told the agent that they would organize a fund-raiser in which a handful of straw donors would attend to make it appear that the money was coming from many people, the complaint said. But Mr. Pan said it would be made clear to Mr. Liu that the event was being financed by the businessman, the complaint said.

Mr. Pan, according to the complaint, introduced the agent to Mr. Liu at the fund-raising event.

When approached by reporters on Thursday night, Mr. Liu repeated his statement from Wednesday that he was “saddened by the news” and that if the accusations were true, then his campaign was “not told the truth.” When asked if he was aware that an Aug. 17 fund-raiser he attended was actually, according to the complaint, a sham with fictitious donors, Mr. Liu responded, “I read that in the complaint.”

Christopher Maag contributed reporting.

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